One size does not fit all when it comes to being compliant with 2020, and many ferry operators are likely to choose a mixture of methods across their fleet – but I believe that scrubbers could be a more favourable option for the ropax sector than low sulphur fuel.
At the Shippax ferry conference currently taking place, Marine & Energy Consulting managing director Robin Meech highlighted facts about using 0.5% fuel, which I believe are going to be more challenging to the ropax industry than adopting scrubbers.
He said the price of using low sulphur fuel will put the price of sea transport up by US$45Bn in 2020 across all sectors. Furthermore, the cost of inland transportation diesel will go up. This will have a direct effect on the ferry industry, as many ferry operators are integrated with the road transport and rail industry, and their costs are likely to increase significantly.
These costs are likely to be passed on to passengers and freight customers. The initial capex of using scrubbers will be higher than switching to low sulphur fuel oil, but Mr Meech estimated the return on investment would only take 2.5 years. Furthermore, his company’s figures suggest the price differential between using heavy fuel oil and compliant fuel would start at US$300 per tonne and level out at US$140/150 long term, which are both high figures. So, I think that there is a compelling argument for using scrubbers.
Operators with scrubbers installed will enjoy much lower bunker costs than competitors choosing low sulphur fuel oil, allowing them to offer competitive freight rates and passenger ticket prices, encouraging businesses and consumers to select their ships.
And there is another specific advantage for ferry operators: many already operate in ECA zones. Per Mr Meech's estimates, the 0.1% fuel required in these areas will go up by 20-30%. Add to the mix the fact that France is pushing for an ECA zone in the Mediterranean and the UK is considering an ECA in the Irish Sea, and there is a strong argument for scrubbers.
There are further disadvantages of using 0.5% fuel oil: it is a new fuel; no one has used it before in any quantity; operators will face one-off costs to change nozzles and clean tanks to deploy it; and there are questions over its availability. It is not expected to be readily available in smaller ports by Q1 2020. Using scrubbers bypasses these issues.
I was surprised to learn at Shippax that only 7% of the total ship scrubber market is made up of ropax ferries, a tiny 3% of the global ropax fleet. When operators look in detail at the challenges of using low sulphur fuel and experience the impact it could have on their customers and knock-on effect on their businesses, scrubbers are likely to be seen by many as the preferred option.